COST ACCOUNTING 
STUDIES 



WILDMAN 



FIRST EDITION 



WILLIAM GREEN 

a corporation 

627 WEST 43d ST., NEW YORK CITY 



Cost Accounting Studies 



BY 

JOHN RAYMOND WILDMAN 

ScB., M.C.S., C.P.A. 

Professor of Accounting in New York University 
School of Commerce, Accounts and Finance 



FIRST EDITION 



1920 
WILLIAM GREEN 

a corporation 

627 WEST 43d ST., NEW YORK CITY 



hi y J\ 



, 



COPYRIGHT, 1920, BY 

John R. Wildman 



m 3 1922 



#/> / o 



1^" 



PART I 



MODEL HAT MANUFACTURING 

COMPANY 



Parti 



A COST SYSTEM AS APPLIED TO THE MANUFACTURE OF 

HATS 

The Model Hat Manufacturing Company, a corporation organized 
and existing under the laws of the State of New York, with an authorized 
capital stock of $500,00*0, is engaged in the manufacture of stiff hats. 
The factory, administrative offices, and salesrooms are located in New 
York City. The salesrooms are separate from the factory and are 
located in the "hatting district." The goods are sold F. O. B., New 
York, and are distributed on a per dozen basis to jobbers and retailers 
throughout the country. 

The factory is organized on a departmental basis. All materials and 
supplies, as well as finished goods, are in the custody of a stock clerk 
and they are issued by him on requisitions approved by the proper 
authority. 

A trial balance of the general ledger, November 30, 1920, follows: 



Cash 

Notes Receivable- 



Tnterest 6%. 



Accounts Receivable, 

Real Estate and Buildings 

Ten Year, 6% Gold Bonds (due Jan. 

1, 1922) 

Capital Stock 

Machinery and Equipment 

Office Furniture and Fixtures 

Materials and Supplies — Inventory. . . . 

Goods in Process — Inventory 

Finished Goods — Inventory 

Notes Payable — Interest 5% 

Accounts Payable 

Accrued Interest on Notes Receivable. 
Interest Accrued on Notes Payable. . . . 
Interest Accrued on Accounts Payable. . 
Wages Accrued 



Debits 

$19,050.54 
25,015.48 
46,381.42 

637,47i-5o 



Credits 



260,880.12 

6,913.72 

7,168.18 

3,747.22 

44,654.16 



$300,000.00 
500,000.00 



812.15 



20,000.00 
17,574.26 

443.46 

617.74 

2,905-32 



Forward $1,052,094.49 $ 841,540.78 



Debits Credits 

Forward $1,052,094.49 $ 841,540.78 

Interest Accrued on Mortgage Payable 7,500.00 

Insurance (unexpired proportion) 73 9.03 

Rent of Salesrooms (paid in advance). . . . 1,200.00 

Reserve for Commissions on Sales 2,238.55 

Reserve for Depreciation of Buildings 31,447.76 

Reserve for Depreciation of Machinery 

and Equipment 13,469.81 

Profit and Loss Surplus 157,836.62 



Total $1,054,033.52 $1,054,033.52 



Inventory of Materials and Supplies — November 30, 1920: 
136 lbs. Coney Tails, English @ $0.70 $95.20 



363 
213 

234 
127 

73 
124 

481 

163 

375 
116 

375 
3i9 
263 
270 

11 reams Sandpaper 9.00 99.00 

281 gals. Denatured Alcohol .88 247.28 

382 yards Ribbon, Bow .01 3.82 

431 Binding .10 43.10 

464 " " Band .11 51.04 

3 gross spools — Thread 16.10 48.30 

11 " papers — Needles 7.90 86.90 

14 " Lables 4.60 64.40 

22 " Leathers 16.00 352.00 

16 " Wires 4.32 69.12 

56 Boxes and Cases 4.00 224.00 



" .74 268.62 

Double Ring 3.90 830.70 

Coney Sides, French 1.50 351.00 

Colored Seal .76 96.52 

-7° 5 1 - 10 

Coney Sides, French 1.44 178.56 

Double Ring 3.94 1,895.14 

Blue Sides 3.00 489.00 

B. C. B. Unpulled 1.60 600.00 

1.56 180.96 

• 1-54 577.5o 

Shellac .38 121.22 

" ; .30 78.90 

Dye Mixture .24 64.80 



Total $7,168.18 



Inventory of Goods in Process — November 30, 1920: 

Put in No. Materials Manufac- General 
Process of Lot and turing Over- 
Quality 1920 Doz. No. Total Supplies Labor Overhead head 

3 A.... Nov. 23/27 37 164 $1,162.22 $549.82 $366.00 $78.86 $167.54 

3 X... Nov. 25/28 34 165 1,316.24 647.29 374.32 96.72 197.91 

A Nov. 27/30 25 166 596.62 276.11 201.86 37.48 81.17 

AW... Nov. 30... 27 167 672.14 333.44 196.23 47.72 94.75 



Total $3,747.22 $1,806.66 $1,138.41 $260.78 $541.37 

\i = =3 ===== = i 



Inventory of Finished Goods — November 30, 1920: 

Lot Number of Cost per 

Quality Number Dozens Dozen Total 

A 158 7 $27.50 $192.50 

A 156 18 26.94 484.92 

AW 159 36 29.28 1,054.08 

AW 154 108 29.58 3.194.64 

3 A 163 163 34.30 5,590.90 

3 A 157 371 34.64 12,851.44 

3X 162 313 41.72 13,058.36 

3X 150 127 41.66 5,290.82 

X Full Stiff 161 27 30.52 824.04 

XX Full Stiff 151 25 31.44 786.00 

Zenith. , 152 29 45-74 i>326.46 

Total $44,654.16 



The purchases for the month were as follows: 

Invoice 
1920. Number 

Dec. 1 1 1,250 lbs. Dye Mixture @ $0.24 $300.00 

10,000 yds. Band Ribbon .11 1,100.00 

50 reams Sandpaper 9.00 450.00 

22,000 yds. Binding Ribbon .10 2,200.00 

4,000 " Bow Ribbon .01 40.00 

100 Boxes and Cases 4.00 400.00 

500 lbs. Double Ring 3.94 1,970.00 

2,500 " Shellac .30 750.00 

Dec. 3 2 200 gross Labels 4.58 916.00 

500 lbs. Blue Sides 3.00 1,500.00 

Dec. 4 3 1,000 " Dye Mixture .24 240.00 

800 gals' Alcohol , .84 672.00 

15,000 yds. Band Ribbon .11 1,650.00 

100 Boxes and Cases 4.00 400.00 

2,000 lbs. B. C. B. Unpulled. . . . 1.56 3,120.00 

3,000 " Coney Tails, English. . .74 2,220.00 

Dec. 5 4 10,000 yds. Band Ribbon .194 1,940.00 

9,000 " Binding Ribbon .16 1,440.00 

100 Boxes and Cases . 4.00 400.00 

1,500 lbs. Coney Sides, French.. 1.46 2,190.00 

3,000 " Shellac .30 900.00 

Dec. 7 5 1,800 yds. Bow Ribbon .01 18.00 

208 gross Wires 4-3 2 898.56 

200 " Leathers 15.80 3,160.00 

200 Boxes and Cases 4-oo 800.00 

6,000 lbs. Colored Seal .70 4,200.00 

2,500 yds. Bow Ribbon .02 50.00 

Dec. 8 6 300 Boxes and Cases 4.00 1,200.00 

Total $35,124.56 



The details of the materials and supplies issued during the month of 
December are shown in the following: 

Requisition No. i (Lot No. 168) 
127 lbs. Colored Seal @ 



305 

136 Coney Tails, English 

89 " " " " . 

375 " B.C.B. Unpulled.... 

116 
18 

349 Dye Mixture 

319 Shellac 

175 gals. Alcohol 

4,802 yds. Band Ribbon 

5,063 Binding Ribbon 

1,222 Bow Ribbon 

1 1 reams Sandpaper 

36/^ gross Wires 

Leathers 



Labels. 



22 

15 
14 

23 

34 " spools Thread 
145 Boxes and Cases. . . . 



$0.76 


$96.52 


.70 


213-50 


.70 


95.20 


.74 


65.86 


1.60 


600.00 


1.56 


180.96 


i-54 


27.72 


.24 


83.76 


.38 


121.22 


•30 


212.10 


.88 


154.00 


.11 


528.22 


.10 


506.30 


.01 


12.22 


9.00 


99.00 


4.32 


157.68 


16.00 


352.00 


15.80 


237.00 


4.60 


64.40 


4.58 


105.34 


16.10 


4-03 


4.00 


580.00 



Total $4,497.03 



Requisition No. 2 (Lot No. 169) 

1,002 lbs. Colored Seal @ 

234 Coney Sides, French 

124 

f- a 11 11 a 

357 " B. C. B. Unpulled. . . '. 

77 . 

213 Double Ring 

302 

575 Dye Mixture 

1,689 " Shellac 

106 gals. Alcohol 

181 " " 

2,012 yds. Bow Ribbon. 



8,335 Binding Ribbon. 

7,904 Band Ribbon. . . 

1 8 reams Sandpaper 

60 gross Labels 

60 Leathers 

60 Wires 

}/2 " spools Thread. . 
239 Boxes and Cases 



$0.70 


$701.40 


1.50 


35i-oo 


1.44 


178.56 


1.46 


89.06 


1.54 


549-78 


1.56 


120.12 


3-90 


830.70 


3-94 


1,189.88 


.24 


138.00 


.30 


506.70 


.88 


93.28 


.84 


152.04 


.01 


20.12 


.10 


833-5o 


.11 


869.44 


9.00 


162.00 


4.58 


274.80 


15.80 


948.00 


4-32 


259.20 


16.10 


8.05 


4.00 


956.00 



Total. . . .« $9,231.63 



Requisition No. 3 (Lot No. 170) 

2,222 lbs. Colored Seal @ $0.70 $1,555.40 

439 Blue Sides 3.00 1,317.00 

1,438 Shellac .30 431.40 

490 Dye Mixture .24 117.60 

245 gals. Alcohol .84 205.80 

1,714 yds. Bow Ribbon .01 17.14 

7,099 Binding Ribbon .10 709.90 

6,732 Band Ribbon .11 740.52 

15 reams Sandpaper 9.00 135.00 

51 gross Labels 4.58 233.58 

51 Leathers 15.80 805.80 

51 Wires 4.32 220.32 

Y<L " spools Thread 16.10 8.05 

204 Boxes and Cases 4.00 816.00 

Total $7,313.51 



Requisition No. 4 (Lot No. 171) 

1,610 lbs. Colored Seal @ $0.70 $1,127.00 

1,000 Coney Tails, English .74 740.00 

312 Coney Sides, French 1.46 455.52 

328 B. C. B. Unpulled 1.56 511.68 

625 Dye Mixture .24 150.00 

1,720 Shellac .30 516.00 

293 gals. Alcohol .84 246.12 

1,234 yds. Bow Ribbon .01 12.34 

816 " " " .02 16.32 

1,934 Binding Ribbon .10 193.40 

6,557 " " .16 1,049.12 

6,026 Band Ribbon .11 662.86 

2,026 " " .194 393-Q4 

17 reams Sandpaper 9.00 153.00 

61 gross Labels 4.58 279.38 

61 Leathers 15.80 963.80 

61 Wires 4.32 263.52 

Y2 " spools Thread 16.10 8.05 

244 Boxes and Cases 4.00 976.00 



Total $8,717.15 



Requisition No. 5 (Manufacturing Overhead) 
1 gross papers Needles @ $7.90 $7.90 

M " " " 7.90 3.95 



Total $11.85 

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15 



Report of Progress of Work in Process 





Putin 


No. 


Process. 


164 




165 




166 




167 




168 


Dec. 2/7 


169 


Dec. 7/15 


170 


Dec. 15/22 


171 


Dec. 22/31 



Completed. 

Dec. 2 
Dec. 2 
Dec. 2 
Dec. 2 
Dec. 7/12 
Dec. 12/21 
Dec. 21/28 



Days in 
Process. 

2 

2 

2 

2 

5 
8 

7 
2 



The number of dozens and quality in each lot are as follows : 



No. 

164— 37— 3 A 
165— 34— 3 X 
166 — 25 — A 
167 — 27 — AW 



No. 

168— 437— A 
169 — 719— 3X 
170 — 612 — 3 A 
171 — 732 — AW 



1920. 


Dozen. 


)e< 


2. 2 


25 

I50 

25 




4 


IOO 


t i 


5 


250 


< i 


7 


35 


i 1 


8 


IOO 

250 

IOO 


i 1 


9 


25 




12 


250 


<< 


14 


50 




21 


150 


i < 


23 


200 

125 
15 


<< 


26 


200 


<< 


28 


200 

IOO 


i i 


29 


300 
10 


1 1 


30 


200 



Report of Sales for December, 1920 

A @ $28.00 $700.00 

3 X 45-oo 6,750.00 

X Full Stiff 34.00 850.00 

3 X 45-°o 4,500.00 

3 A 37-oo 9,250.00 

AW 30.00 1,050.00 

AW 30.00 3,000.00 

3A 37-00 9,250.00 

3 X 45-oo 4,500.00 

AW 30.00 750.00 

A 28.00 7,000.00 

A 28.00 1,400.00 

3X 45.00 6,750.00 

3 X 45-oo 9,000.00 

A 28.00 3,500.00 

Zenith 50.00 750.00 

3 X 45-oo 9,000.00 

3 X 45-oo 9,000.00 

3 A 37-°o 3,700.00 

3 A 37-oo 11,100.00 

XX Full Stiff 36.00 360.00 

3 A 37-oo 7,400.00 

Total $109,560.00 



16 



A trial balance of the general ledger, December 31, 1920, before 
closing, follows: 



Cash 

Notes Receivable 

Accounts Receivable 

Real Estate and Buildings 

Ten Year, 6% Gold Bonds (due Jan. 1, 
1922) 

Capital Stock 

Machinery and Equipment 

Office Furniture and Fixtures 

Materials and Supplies 

Goods in Process — Inventory 

Finished Goods — Inventory 

Notes Payable — Interest 5% 

Accounts Payable 

Accrued Interest on Notes Receivable . . 

Interest Accrued on Accounts Payable. . 

Interest Accrued on Notes Payable 

Wages Accrued 

Interest Accrued on Mortgage Payable. . 

Insurance 

Reserve for Commissions on Sales 

Reserve for Depreciation of Buildings . . . 

Reserve for Depreciation of Machinery 
and Equipment 

Profit and Loss Surplus 

Sales 

Allowances for Shortage 

Outward Freight and Cartage 

Inward Freight and Cartage (Overhead) . 

Labor — Direct 

Labor — Indirect 

Manufacturing Supplies 

Heat, Light and Power 

Depreciation of Machinery and Equip- 
ment 

Salaries of Manager and Clerks (Factory) 

Miscellaneous Factory Expense 

Salaries of Salesmen 

Traveling Expenses — Salesmen 

Commissions 

Advertising 

Office Expenses — Sales Department .... 

Salaries — Administrative Officers and 
Clerks 

Office Expenses — Administrative 

Legal Expenses 



$33,759-io 
31,015.48 

59,367-17 
638,562.50 



261,862.92 
7,003.75 

42,292,74 
3,747-22 

44,654.16 



840.15 



809.03 



574-25 
338.29 
246.32 

23,395-39 
1,216.22 

11.85 
572.48 

1,200.00 

1,075.00 

269.58 

896.75 

274.86 

5,002.76 

871.36 

33-56 

2,637.89 

239.46. 

1,200.00 



$300,000.00 
500,000.00 



20,000.00 
12,768.82 

517-74 

549-32 

4,105-32 

9,000.00 

7,241.31 
3i,447-76 

14,669.81 
157,836.62 
109,560.00 



Forward $1,163,970.24 

17 



il, 167,696.70 



Forward $1,163,970.24 



General Expenses 

Interest on Bank Balances 

Interest on Notes Receivable. . . 
Interest on Accounts Receivable 

Rent of Salesrooms 

Taxes 

Interest on Notes Payable 

Interest on Accounts Payable. . . 
Interest on Mortgage Payable . . 



534-17 



1,200.00 
525.00 
105.86 
126.32 

1,500.00 



Total $1,167,961.59 



11,167,696.70 

25.62 

164.88 

74-39 



11,167,961.59 



The inventories, December 31, 1920, follow: 

Materials and Supplies 

Goods in Process 

Finished Goods 

Unexpired Insurance 



112,521.57 

16,322.43 

8,469.18 

699.03 



Close the general books and prepare: 

(a) General balance sheet, December 31, 1920; (b) statement of 
income and profit and loss for the month ended December 31, 1920. 

Balance the ledgers of the cost system, agreeing the aggregate of the 
details in each case with the controlling account in the general ledger 
and prepare : 

(a) Statement of sales and costs which will prove the profit and loss 
surplus as reflected by the income statement prepared from the general 
books. 



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J 9 



PART II 



MODEL HAT MANUFACTURING 

COMPANY 



Part II 



On January i, 192 1, on account of a change in its commercial relations, 
the Company instead of manufacturing on order exclusively, commences 
to manufacture bodies for stock, shipping them as orders are received. 

This method greatly facilitates the filling of orders but makes certain 
changes in the cost system advisable. The changes are of two kinds: 
first, the reorganization of the stores department; and, second, an elabora- 
tion of the cost books and records. 

The stores department will now consist not only of the stock room 
proper, from which all materials and supplies are primarily issued, but 
various branches distributed throughout the departments where materials 
and supplies are used. In addition to these, there will be a room devoted 
to the storing of stock bodies. 

The cost books and records will be elaborated by the installation of 
the following books and forms : 

Books 

(a) — Cost Department Ledger, 
(b) — Cost Department Journal. 
Controlling : 

1 — Main Stores Ledger. 

2 — Department Stores Ledger. 

3 — Production Orders Ledger. 

4 — Stock Bodies Ledger. 

5 — Finished Goods Orders Ledger. 

6 — Finished Goods Stock Ledger. 

Forms 

1 — Report of Materials and Supplies Received, Main Stores. 

2 — Production Order. 

3 — Requisitions for Materials and Supplies. 

4 — Report of Materials and Supplies Issued, Main Stores. 

5 — Report of Forming Department. 

6 — Department Report of Materials and Supplies Consumed. 

7 — Finished Goods Order. 

8 — Requisition for Stock Bodies 

9 — Report of Stock Bodies Issued. 
10 — Shipping Order. 
11 — Report of Orders Shipped. 
12 — Cost Sheet. 

23 



Provide for the transfer of the account balances from the old Materials 
and Supplies Ledger to the new Main Stores Ledger, after considering 
the following: In the accounts listed below, the balances should be 
reduced from gross units to single units and the prices per unit increased 
to read as indicated : 

Account Price per Unit 

Leathers $ .n 

Labels . 03 2 

Needles .055 

Thread .112 

Provision should be made in the Finished Goods Stock Ledger for the 
various lots left in stock December 31, 1920, as follows: 
F.G.O. 



I- 


-37 Doz. A Spring Dunlap 


Brown 


Size 7 


2- 


—11 ' 


1 AW Stetson 


Black 


" 6% 


3" 


-83 ' 


3 A Spring Dunlap 


Black 


" 7 


4- 


-93 ' 


1 3 X Boston Derby 


Brown 


" 7 


5- 


- 2 ' 


1 X Full Stiff Brentwood 


Black 


" 7 


6- 


-is ' 


' XX Full Stiff Brentwood 


Black 


" 7 


7- 


-14 ' 


' Zenith Week-end 


Brown 


" 7 



Provision should be made in the Production Orders and Finished 
Goods Orders Ledgers for 732 doz. AW left in process December 31, 
1920. This lot consists of Stetsons, black, size 7. 

The following accounts should be opened in the Cost Department 
Ledger : 

Main Stores Ledger. Department Stores Ledger. Production 
Orders Ledger. Stock Bodies Ledger. Finished Goods Orders Ledger. 
Finished Goods Stock Ledger. Labor-Direct. Overhead. Overhead 
Suspense. General Account. 



Form 10 




SHIPPING ORDER 






MODEL HAT MANUFACTURING COMPANY 


Shipping Order Date January 2, 192 1. 
Ship Via U. S. Express 


To Duffy, Powers Company 

Rochester, N. Y. 


Quality A Style Spring Dunlap 
Color Brown Dozen 37 


SIZES 


6^ 


6M 


(>% 


7 


iVi 


7M 


iVs 








37 









24 



Subsequent Shipping Orders 

Shipping Order 2 — A W 11 Dozen 

3— 3A 83 

4— 3X. 93 

5— X Full Stiff 2 

6— X X Full Stiff 15 

7 — Zenith 14 

PURCHASE INVOICE 



New York, January 4, 192 1 
Model Hat Manufacturing Company 



TO HALL AND HARMAN 
481 Greene Street 



Terms — 30 Days Net 



Tel. 920 Spring 



500 



lbs. Colored Seal 



(Rubber Stamp) 

Goods Rec'd — 

Quantity O. K. . . — 

Quality O. K — 

Prices O. K — 

Extensions O. K. . — 

Invoice No — 



m 



70c 



50 



00 



25 



Subsequent Purchase Invoices 

No. 2 — 2,500 lbs. Shellac @ $0.30 $750.00 

550 gals. Alcohol .84 462.00 

3 — 1,000 lbs. Dye Mixture .24 240.00 

4 — 25 reams Sandpaper 9.00 225.00 

5 — 10,000 yds. Band Ribbon .194 1,940.00 

12,500 " Binding Ribbon .16 2,000.00 

7,500 " Bow Ribbon .02 150.00 

6 — 1,000 lbs. Shellac .30 300.00 

200 gals. Alcohol .84 168.00 

7 — 15,000 Wires .03 450.00 

15,000 Leathers .11 1,650.00 

15,000 Labels .032 480.00 

8 — 1,500 lbs. Shellac .30 450.00 

9 — 1,000 " Colored Seal .70 700.00 

" 10 — 25 reams Sandpaper 9.00 225.00 

" 11 — 375 Boxes and Cases 4.00 1,500.00 



PRODUCTION ORDER 



Form 2 



MODEL HAT MANUFACTURING COMPANY 

No. 172 
Production Order j Sp ^ ial Date January 2> IQ2I< 

Foreman, Making Department: 

You are hereby instructed to proceed with the production of 
the following order; to draw on the main stores for the necessary 
materials and supplies; and to charge all labor and material ex- 
pended on same to the above order number. y 


QUALITY. 


STYLE. 


COLOR. 


BLOCK. 


DEPTH. 


BRIM. 


sx 


Boston 
Derby 


Brown 


226 


sM 


2 


6 5 A 


6% 


6Vs 


7 


lY% 


?M 


7% 




50 


5° 


100 


50 










JLMO. Ol J 




*cno *^»- 








Superintendent. 



26 



Subsequent Production Orders. 

No. 173 — 3X — Boston Derby — Black — 150 doz. — 100 size 7 — 50 size 7^ 
174 — 3X — Boston Derby — Champagne — 200 doz. — 150 size 7 — 50 

size 7 34 
175 — AW — Spring Dunlap — Black — 250 doz. — 50 size 6% — 200 

size 7. 
176 — AW — Knox — Black — 200 doz. — 100 size 6% — 10 ° si ze 7- 



REQUISITION FOR MATERIALS AND SUPPLIES. 



Form 3 



MODEL HAT MANUFACTURING COMPANY 
Requisition No. 1 Date January 2, 192 1. 

Main Stores: 

Please issue and charge to Making Department the following 
materials and Supplies : 




Foreman, Making Dept. 


NUMBER OF 

UNITS. 


DESCRIPTION 


UNIT 
PRICE. 


AMOUNT 


180 lbs. 

150 " 
145 " 
350 " 


Double Ring 

B. C. B. Unpulled 
Coney Sides, French .... 
Colored Seal 


$3-94 

1.56 

1.46 

.70 


$709 

234 
211 

245 


20 
00 
70 
00 






Total 




$i,399 


90 



27 



Subsequent Requisitions for Materials and Supplies 



No. 2 Stiffening Dept., 

3 Coloring Dept., 

4 Finishing Dept., 

5 Trimming Dept., 



6 Packing Dept., 

7 Making Dept., 



8 Stiffening Dept., 

9 Coloring Dept., 
io Finishing Dept., 
II Trimming Dept., 



12 Packing Dept., 

13 Making Dept., 



14 Stiffening Dept., 



Coloring Dept., 
Finishing Dept., 
17 Trimming Dept., 



15 
16 



18 Packing Dept., 

19 Making Dept., 



20 Stiffening Dept., 

21 Coloring Dept., 

22 Finishing Dept., 

23 Trimming Dept., 



1,000 lbs. Shellac 

250 gals. Alcohol 

250 lbs. Dye Mixture. 
8 reams Sandpaper. 



24 Packing Dept., 

25 Making Dept., 



3,000 yds. 
3,000 
800 
3,250 
3,250 
3,250 
500 papers 

30 spools 

90 
105 lbs. 

90 " 

87 " 
210 " 

365 " 
75 gals. 
125 lbs. 

4 reams 
1,650 yds. 
1,740 " 

420 " 
1,800 " 
1,800 
1,800 

15 spools 

50 

142 lbs. 
120 " 
116 " 
278 " 
470 " 
80 gals. 
160 lbs. 

5 reams 
2,200 yds. 
2,320 

560 
2,400 
2,400 
2,400 

19 spools 
68 

112 lbs. 

107 " 

342 " 

550 " 

600 " 

100 gals. 

200 lbs. 

6 reams 
2,750 yds. 
2,900 " 

700 " 
3,000 
3,000 
3,000 

24 spools 

85 ' 

90 lbs. 



Band Ribbon 

Binding Ribbon 

Bow Ribbon 

Leathers 

Wires 

Labels 

Needles 

Thread 

Boxes and Cases 

Double Ring 

B. C. B. Unpulled.. . 
Coney Sides, French . 

Colored Seal 

Shellac 

Alcohol 

Dye Mixture 

Sandpaper 

Band Ribbon 

Binding Ribbon 

Bow Ribbon 

Wires 

Leathers 

Labels 

Thread 

Boxes and Cases 

Double Ring 

B. C. B. Unpulled... 
Coney Sides, French . 

Colored Seal 

Shellac 

Alcohol 

Dye Mixture 

Sandpaper 

Band Ribbon 

Binding Ribbon 

Bow Ribbon 

Wires 

Leathers 

Labels 

Thread , 

Boxes and Cases . . . . 
B. C. B.^ Unpulled.. 
Coney Sides, French 
Coney Tails, English . 

Colored Seal 

Shellac 

Alcohol 

Dye Mixture 

Sandpaper 

Band Ribbon 

Binding Ribbon 

Bow Ribbon 

Wires 

Leathers 

Labels 

Thread 

Boxes and Cases 

B. C. B. Unpulled. . . 



#0.30 #300. 00 

.84 210.00 

.24 60.00 

9.00 72.00 

.194 582.00 

.16 480.00 

.02 16.00 

•11 357-50 

•03 97-50 

.032 104.00 

•055 27.50 

.112 3-36 

4.00 360.00 

3-94 4I3-70 

1.56 140.40 

1.46 127.02 

.70 147.00 

.30 109.50 

.84 63.00 

.24 30.00 

9.00 36.00 

.194 320.10 

.16 278.40 

.02 8.40 

.03 54-00 

.11 198.00 

.032 57.60 

.112 1.68 

4.00 200.00 

3.94 559-48 

1.56 187.20 

1.46 169.36 

.70 194.60 

.30 141.00 

.84 67.20 

.24 38.40 

9.00 45.00 

.194 426.80 

.16 371.20 

.02 11.20 

.03 72.00 

.11 264.00 

.032 76.80 

.112 2.13 

4.00 272.00 

1.56 174.72 

1.46 156.22 

.74 253.08 

.70 385.00 

.30 180.00 

.84 84.00 

.24 48.00 

9.00 54.00 

•194 533-50 

.16 464.00 

.02 14.00 

.03 90.00 

.11 330.00 

.032 96.00 

.112 2.69 

4.00 340.00 

1.56 140.40 



28 



No. 25 Making Dept, 



26 Stiffening Dept. 



27 
28 
29 



Coloring Dept., 
Finishing Dept., 
Trimming Dept. 



30 Packing Dept., 



85 lbs. 

273 " 
440 " 
470 " 
80 gals. 
160 lbs. 
5 reams 
2,200 yds. 
2,320 " 
560 " 
2,400 
2,400 
2,400 

19 spools 

70 



Coney Sides, French . 
Coney Tails, English. 

Colored Seal 

Shellac 

Alcohol 

Dye Mixture 

Sandpaper 

Band Ribbon 

Binding Ribbon 

Bow Ribbon 

Wires 

Leathers 

Labels 

Thread 

Boxes and Cases . . . . 



$1.46 

•74 
.70 

•30 
.84 
.24 
9.00 
.194 
.16 
.02 



#124.10 

202.02 

308.00 

141.00 

67.20 

38.40 

45.00 

426.80 

371.20 

11.20 



.03 72.00 

.11 264.00 

.032 76.80 

.112 2.12 

4.00 280.00 



Extensions have been given here to facilitate the student's work, but 
it should be borne in mind that in practice the pricing and extending 
are done only after the requisitions have been filled. 



DAILY REPORT— FORMING DEPT. 



Form 5 



MODEL HAT MANUFACTURING COMPANY 
Production Order No. 172 Date January 4, 1921. 


FUR MIXTURE. 


POUNDS. 


PRICE. 


AMOUNT. 


Double Ring 


35 

30 
29 

69 


$3 
1 

1 


94 
56 
46 
70 


$137 
46 
42 
48 


90 

80 

34 
30 
34 

34 


B. C. B. Unpulled 


Conev Sides, French 


Colored Seal 


Number of Dozens Formed .... 50 

Cost per Dozen $5.5068 

Good 49 @ 5.5068 — $269.83 

K. D's 1 ©5.5068— 5.51 


$275 






$275 











29 



Subsequent Daily Reports — Forming Department 



1921. 


Prod. 
Order. 


Double 
Ring. 


B. C. B. 

Unpulled. 


Coney 

Sides, 

French. 


Colored 
Seal. 


Number 
Dozens 
Formed. 


Good. 


K. D.'s. 


Jan. 5 

6 

7 

8 

9 


172 
172 
172 
172 

173 


35 
35 
35 
35 
35 


30 
30 
30 
30 
30 


29 
29 
29 
29 
29 


69 

69 
60 

69 

69 


50 
50 
50 
50 
50 


49 
49 
49 
49 
49 


I 
I 
I 

I 
I 



Subsequent Daily Reports — Summarized by Weeks 



Week 

Ending 

1921. 


Prod. 
Order. 


Double 
Ring. 


B, C. B. 

Unpulled. 


Coney 

Sides, 

French. 


Coney 

Tails, 

English. 


Colored 
Seal. 


Number 
Dozens 
Formed. 


Good. 


K. D's. 


Jan. 16. . 

23- • 
30. . 


173 
174 

175 
176 


70 
140 


60 
I20 
112 

90 


58 
Il6 
IO7 

85 


342 
273 


138 
276 

550 
44O 


IOO 
200 
250 
200 


98 

196 

245 
196 


2 
4 
5 

4 



Daily Reports of Materials and Supplies Consumed, by Other 
Departments, Summarized for the Month 





Production Order Number. 


172. 


173- 


174. •• 


175. 


176. 


K. D.'s. 


Stiffening Dept. : 

Shellac, lbs 

Alcohol, gals. . . . 

Coloring Dept. : 
Dye Mixture, lbs. 


575-7 
98 

196 


345-5 
58.8 

117. 6 


460.6 

78.4 

156.8 


575-7 
98 

196 


345-5 
58.8 

117. 6 


49.4 
8.4 

16.8 



3° 



Pay-Roll — Forming Department — Summarized for Month 



Operative. 



F. Clark 

G. Baker 

J. Aubrey. . . 
P. McGuire. . 

E. Fog 

P. Malloy . . . 

Total 



Amount 
Earned. 



;i 5 6 

170 

120 

118 

36 

35 



#638 



50 



Distribution. 
Production Order Number. 



171. 172. 173 



?I8 
20 
15 
14 

4 

4 



$77 



40 



$32 

35 
24 
24 

7 
7 



£130 



82 



#19 
21 

15 
14 



$78 



96 



174- I7S- 176. K. D.'s 



#25 
27 

19 

19 

6 

5 



#104 



40 



#32 

34 

24 
24 

7 
7 



£130 



69 



£25 

28 

19 

19 

6 

5 



£105 



02 



$2 

2 
2 
2 



.11 



76 

99 
12 
08 
64 
62 



21 



Pay-Roll — Other Departments — Summarized for Month 



Department 



Sizing 

Pinning Out and 
Rounding .... 

Shaving 

Stiffening 

Coloring 

Blocking 

Squaring 

Pouncing 

Pressing 

Total . . . 



Total. 



#2,882 

55 
114 
298 
162 
412 

73 

32 

744 



#4,775 



3i 



171. 



£292 

6 
14 
38 
20 

52 
9 
4 

95 



#534 



43 



Distribution. 

Production Order Number. 



172. 



#730 

II 
2d 
63 

34 

88 

15 
6 

159 



#i,i34 



173. 



#437 

6 
14 
38 
20 

52 
9 
4 

95 



#680 



66 



174. 



#583 

9 
19 
50 
27 
70 
12 

5 
127 



#907 



84 



175- 



#490 

II 

24 
64 

34 
88 

15 
6 

158 



#894 



93 



176. K. D.'s. 



#293 

6 

14 
38 
20 

52 
9 
4 

94 



#535 



37 



#53 

1 
2 

5 
2 

7 
1 

13 



#87 



74 

00 
10 
46 
96 
10 
30 

54 
10 



30 



Lot Nos. 1 71-17 5, inclusive, are completed in the rough and transferred 

to Stock Bodies Store-room. 
Lot No. 176 — 74 Dz. Size 6^ and 74 Dz. Size 7 — good bodies are com- 
pleted and transferred. 
— 24 Dz. Size 6j^ and 24 Dz. Size 7 — good bodies are formed, 
but only Forming labor, $27.10 was expended thereon. 
1 Dz. K. D.'s remain uncompleted January 31, 192 1, with 
charges as follows: Fur, $4.76; Shellac, $0.71; Alcohol, 
$0.34; Dye Mixture, $0.19; Forming labor, $0.53. 



Key to Stock Numbers — Stock Bodies Store-room 

AW Stetson, Black Size 7 732 Dozen 

3X Boston Derby, Brown " 6% 49 " 

" "6% 49 " 

" "7 98 

(< tt a ti h 1/ ._ u 

778 49 

3i 



6- 

7" 
8- 

9 
io 

ii 

12 

13 



3X Boston Derby, Black Size 7 



— AW 



Champagne. 
Spring Dunlap, Black 



Knox 
«< 



6% 

7 



98 Dozen 

49 
147 

49 

49 

196 

74 
74 



Form 7 



FINISHED GOODS ORDER 



MODEL HAT MANUFACTURING COMPANY 



Finished Goods Order No. 9 



Date January 6, 192 1 



Foreman, Finishing Dept. : 

You are hereby instructed to complete, . and advance through the 
necessary departments for shipment, the following described stock. 
You will make requisition on the Stock Bodies Stores, and charge 
all labor and material used in connection therewith to the above order 
number. 



Superintendent 



Quality 3 X 
Color Brown 



Style Boston Derby 
Dozens 245 



6H 



49 



6Vs 



49 



98 



lV% 



49 



iVs 



Labor coupons are attached here, e. g. 



No. 



Finishing 
Price 



No. 

Curling 
Price 



No. 

Trimming 
Price 



No. 

Binding 
Price 



32 



Subsequent Finished Goods Orders 



No. 10 — 147 Dozen / 98 Dz. 3X Boston Derby, Black, Size 7 

t 49 " 3X " " " 

11— - 196 " J 147 Dz. 3X Boston Derby, Champ, Size 7 

49 " 3X 
- 245 J 49 Dz. AW Spring Dunlap, Black, Size 6% 

196 " AW " " "7 



7^ 



7^8 



REQUISITION FOR STOCK BODIES 



Form 8 



MODEL HAT MANUFACTURING COMPANY 


Stock Bodies Req. No. 1 Date January 21, 192 1. 


Stock Clerk: 


Please, issue to Finishing Department the following stock bodies 
and charge to Finished Goods Order No. 9. 


Foreman 


Stock 
No. 


Dozens. 


Stock 

No. 


Dozens. 


Stock 

No. 


Dozens. 


1 
2 

3 
4 


49 
49 
98 


5 
6 

7 
8 

9 


49 


IO 
II 
12 

13 












Total 


245 



33 



Subsequent Requisitions — Stock Bodies 



Stock No. 



Req. No. 2 



Req. No. 3 



Req. No. 4 



Req. No. 5. 



I 
2 
3 

4 

5 
6 

7 
8 

9 
10 
11 

12 

13 



732 



98 
49 



147 
49 



49 
196 



Total 



73 2 



147 



196 



245 



Finished Goods 
Order No. 



10 



11 



12 



DAILY REPORT OF MATERIALS AND SUPPLIES CONSUMED 
BY DEPARTMENTS, SUMMARIZED FOR THE MONTH 

Form 6 



Finished Goods Order 



No. 8. 



No. 9. 



No. 10. 



No. 11. 



No. 12. 



Finishing Dept. : 

Sandpaper — Reams. 
Trimming Dept. : 
Ribbon — Yards : 

Band 

Binding 

Bow 

Wires 

Leathers 

Labels 

Needles — Papers. . . 
Threads — Spools. . . 
Packing Dept. : 

Boxes and Cases. . . 



73 



2,695 
2,842 
686 
2,940 
2,940 
2,940 

25 
24 

82 



3K 



1,617 
1J05 
412 
1,769 
1,769 
1,769 

15 
15 

49 



aV2 



2,156 
2,274 

549 

2,352 

2,352 

2,352 

20 

19 
66 



2,695 

2,842 

686 

2,940 
2,940 
2,940 

25 
24 

82 



34 



PAY-ROLLS— OTHER 



DEPARTMENTS— SUMMARIZED 
THE MONTH 



FOR 



Departments. 



Total. 



Finished Goods Order 



No. 8. 



No. 9. No. 10. No. 11 



No. 12. 



Finishing. 
Rounding 
Curling. . 
Wiring. . . 
Labeling . 
Binding. . 
Trimming 
Packing. . 

Total. 



12,321 

60 

807 

50 
19 

1,055 
224 



$5,694 



25 
67 
11 

34 
58 
60 

53 
06 



$306 

8 

121 

7 

2 

147 

151 
34 



14 



$780 



90 

99 
12 

64 
98 
10 
88 
12 



>62 5 

15 
202 

12 

4 

317 

275 

56 



73 



; i,5°9 



10 

24 
64 
5o 
80 

85 
12 

09 



$375 

9 
122 

7 
2 

190 

163 

32 



34 



)Q4 



15 
22 

26 

85 
98 
80 

29 

80 



$499 

11 

160 

9 

4 

255 
220 

44 



35 



.1,205 



85 

95 

25 

85 
02 

10 

24 

70 



$514 

15 

200 

12 

4 

244 

245 

56 



96 



•1,293 



25 
27 
84 
5o 
80 

75 
00 

35 



76 



Finished Goods Orders 8 to 12, inclusive, are completed. The over- 
head for the month is $18,982.28. Distribute over Finished Goods 
Orders in the proportion which the overhead bears to prime cost. Over- 
head in Suspense is to be charged to Finished Goods Order No. 8, which 
will share in the $18,982.28 only to the extent of the new prime cost. 



SHIPPING ORDER 



Form 10 (Revised) 



MODEL HAT MANUFACTURING COMPANY 

Shipping Order No. 8 Date January 7, 192 1. 
Ship At once Via Amer. Ry. Express. 

TO F. C. ADAMS, INC. 

545 Main St., Albany, N. Y. 


Quality. 

3X 

< < 


Style. 


Color. 


No. OF 
Dozens 


Sizes. 


6M 


6V 8 


7 


7M 


7H 


Boston Derby 


Brown 
Black 


225 
135 


40 


45 


95 
95' 


45 
40 





35 



Subsequent Shipping Orders 



No. 

9 

IO 

ii 

12 


Quality. 


Style. 


Color. 


No. OF 
Dozens 


Sizes. 


6H 


6H 


7 


7H 


3X 

AW 

AW 

3X 

3X 

3X 

AW 


Boston Derby 
Spring Dunlap 
Stetson 
Boston Derby 

<< 

Boston Derby 
Spring Sunlap 


Brown 

Black 

Black 

Black 

Champ. 

Champ. 

Black 


20 
230 

732 

12 

l8o 

14 
12 


9 


4 
40 

3 
9 


3 
190 

732 

9 

140 

7 
3 


4 

40 

7 



Prepare : 

(a) Production cost sheet for the month. 

(b) Memorandum showing the price at which "knockdowns" can 
be finished and sold without a loss. 



36 



C/5 
W 

O 
H 
CO 







Q 






a 






> 






i-« 






w 






u 






w 


CO 




tf 








O 


HH 


— 


fc 


O 


-■ 


£ 

H 


a 


PL! 

to 


o 


o 


- 


- 

CO 




en 
4 



as 
W 
H 

< 

b 
O 

H 

as 
O 

2- 

w 









o 

o 
o 


CO 

bo 




Shellac. 


CO 




Coney 

Tails, 

English. 






■a 

£ S 

OW 

U 


10 




Coney 

Sides, 

French. 


to 




3* 


(0 






CO 




Purchase 

Invoice 

No. 







37 



en 
W 

O 

H 
CO 





P 




w 




p 




en 




tn 




t— i 




en 


•* 


W 

h- 1 


. 


hJ 


O 


fa 


Z 


fa 
P 


a 


CO 


o 


p 


Ph 





fa 
o 

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fa 
o 
fa 
w 
P* 



o 




O 


to 

Til 


o 


bo 









OC/2 

O 



111 
Q cn£ 



^1 



,q bo 

3 s 

°rv ! 






38 



6 



o 



















• 




(J 

s 

w 
& 

H 


o 
,3 
o 
o 

< 
























































































6 
























































































H 
&, 
W 

Q 

a 

g 


id 

Vnr-I 

O aJ 

r-H D 


On On O* On On • 
NO n£) no vo NO 








































































5?S 

fl-d 


On On On On On ■ 
04 CS CN| N CN • 








































































pq . 


o o o o o • 

CO CO CO CO CO • 










































































lO io io to io • 

CO CO CO CO CO • 








































































H 

CO 

O 

O 


*d- rt- ^- ^t- rj- • 
CO CO CO CO CO ' 


• ' ONtO 

■ • r-^ o no 


























lOiOiOioiO • 

r>. r^ r^ r^ t^ • 

N N Ol M N • 
6Q- 


• NO <0 i-i 

• • r^» io (Nj 
' ' ^ *?. 


























































W 

N 
O 

Q 


o 

O 
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ON On On ON On • 
































• • CNl • • 


>::::: 










































































V 

a 

u 

O 

Pu 


o o o o o • 

lO lO lO lO lO • 






















• • lO • • 






• 


























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h N fO^t lONO 






Pi 
< 

s 

W 
H 
W 




o 2 

H 5 

§ 


0) 

M 




Total Units 

Amount 

LessK.D.'s 

Good 


CO 

h-l 




Q 



39 



ON 

d 

o 
ft 



Q 
W 
U> 
en 
en 

cn 

W 
>-< 

a 
o 
PQ 

M 
8 

fa 
O 

o 

cm 
w 

P5 



cn 
Pi 
H 
PQ 

M 
o 

o 

H 
cn 



o 



o 

ft 



Q 
W 

CM 

CM 

l-H 

W 

cn 

& 
W 
Q 

o 

fa 
o 

& 

o 

w 

P4 



o 

6> 

w 

peS 






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a 




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so 
cn 



40 



CO 

H 

to 
O 
O 

O 

O 

co 

^ 
O 
O 

P 
CO 



o 



o 



H 
pq 

3 

f* 

W 
P 

o 

CO 

Q 
O 
O 
O 

Q 
W 
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W 

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o 

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W 

> 
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3 

H 

O 



41 



PART III 



PROBLEM No. 1 

A trial balance of the general ledger of the Blakeney Shoe Manu- 
facturing Company, after closing, June 30, 1920, follows: 



Cash 

First Mortgage Bonds 

Real Estate and Buildings 

Notes Payable 

Notes Receivable 

Accounts Receivable 

Capital Stock 

Machinery and Equipment 

Accounts Payable 

Materials and Supplies — Inventory. 

Finished Goods — Inventory 

Office Furniture and Fixtures 

Profit and Loss Surplus 



Debits 
$65,344.98 

1,055,725-88 

245,540.00 
522,558.92 

718,537.44 

224,210.80 
17,172.48 
11,907.96 



Credits 

$335» 200 -oo 
651,253.96 

1,340,000.00 
248,732.08 

285,812.42 



Total $2,860,998.46 $2,860,998.46 



45 



The record of sales shows that 128,990 pairs were sold and that 3,265 
pairs were returned. The following is an analysis of the profit and loss 
account for the year: 

Credits 

Sales $773,940.00 

Debits 

Direct Labor $213,732.50 

Indirect Labor 25,145.00 

Return Sales 19,590.00 

Allowances on Sales. 2,514.50 

Heat, Light, and Power — Factory 12,572.50 

Office Expense — Factory 10,058.00 

Salaries of Manager and Clerks — Factory 35,203.00 

Materials and Supplies 226,305.00 

Outward Freight and Cartage 10,058.00 

Salaries of Salesmen 27,659.50 

Traveling Expenses of Salesmen 10,058.00 

Salaries of Officers 30,174.00 

Advertising Expense 22,630.50 

General Expenses 12,572.50 

Legal Expenses 7,543.50 

Interest on Notes Payable 5,029.00 

Interest on Bonds 20,116.00 

Uncollectible Accounts 2,514.50 

Balance 80,464.00 



Total Debits $773,940.00 



Prepare a statement of income and profit and loss, showing costs, 
item by item; and a general balance sheet. 



46 



PROBLEM No. 2 

The Baker Realty Company is incorporated under the laws of the 
State of New York, with an authorized capital stock of $200,000 divided 
into 2,000 shares of the par value of $100 each. Its business consists of 
acquiring, improving and selling land. The sales agreements contain 
the following provision in regard to payments: 15% of the selling price 
shall be paid upon signing contract, the balance to be paid in equal 
monthly installments extending over a period of three years ; 2% discount 
is allowed for cash in excess of the 15% paid at time of signing contract 
and interest is charged on the unpaid principal at the rate of 6% per 
annum; upon completing payment of two-thirds of the contract price, 
the purchaser has the privilege of giving a three-year, 5% interest bearing 
mortgage on the property for the balance. The property is not subject 
to back taxes and is fully improved when sold. Upon the execution of 
the mortgage, a deed to the property is delivered. 

After filing its charter with the Secretary of State and the County 
Clerk, July 29, 19 19, the Company begins business with $3,000, the 
amount which the charter requires to be paid in and which represents 
the sale of 30 shares of capital stock to the incorporators. 

At the first meeting of stockholders, the following proposition is 
considered and favorably acted upon: Henry Frost offers to sell to the 
Company 37^ acres of land, 43,560 sq. ft. to the acre, fully described 
and bounded in proposal, at $200 per lot of 20x100 feet ; terms of payment, 
$82,994 of the capital stock and balance covered by a purchase money 
mortgage at present held by Charles Rossiter, payable July 1, 1922, and 
bearing interest at the rate of 4^ %per annum; taxes for the year 19 19 
to be paid by vendor. The sale is effected as of August 1, 19 19. 

Upon acquiring the property, the Company proceeds to have the 
tract resurveyed and laid out in streets, with the result that the official 
map shows 724 lots available for sale. These are entered on the lot 
inventory book, a summary of which appears at the end of the problem. 



47 



The trial balance of the general ledger, June 30, 1920, before closing 
is as follows: 

Debits Credits 

Cash $5,250.86 

Notes Receivable 16,000.00 

Land 

Capital Stock $105,994.00 

Mortgage Payable 

Accounts Payable 16,651.36 

Telephone Poles 3,140.00 

Salaries 14,513.96 

Commissions 32,760.00 

Sewers 25,255.64 

Grading 11,525. 94 

Curbing. P> 6,513.46 

Electric Lights 10,574.44 

Office Expenses 1,942.46 

Taxes (Corporation) 115.00 

Accounts Receivable 100,168.62 

Interest and Discount 1,447.78 

Railroad Expense 20,000.00 

Sales 2 18,400.00 

Recording Mortgages 712.50 

Mortgages Receivable 8,657.18 

Title Insurance 2,664.00 

Water 9,125.74 

Water Deposit 600.00 

Cash Discount on Sales 436.80 

Notes Payable 40,000.00 

Lots Returned 11,200.00 

Allowances 750.00 

Advertising 17,592.54 

From the information previously given, determine and insert the 
missing account balances in the above. You ascertain from the Board 
of Assessment that the valuation for the year 1920 has been placed at 
$241,650 and the rate for the year is .0163. 

Railroad Expense represents capital stock issued to the railroad 
company in consideration for having erected a new station on the prop- 
erty of the Baker Realty Company. 

The Accounts Receivable account contains an amount of $1,013.84 
representing items which probably will not be collected. Title Insurance 
covers cost of title insurance policies presented to purchasers of lots. 
Water Deposit is an asset account. Scrip is issued for the fractional 
share of capital stock. 

An analysis of the Interest and Discount account shows: 

Dr. Cr. 

Interest on Mortgage Interest on Contracts. $4,372.20 

Payable $2,955.66 Interest on Bank 

Balances 31.24 

48 



THE BAKER REALTY COMPANY 
Lot Inventory Book 



Purchased 

Block No. i 56 

2 58 

3 48 

4 64 

5 So 

6 38 

7 52 

8 66 

9 34 

10 54 

11 70 

12 46 

13 44 

14 44 

Total 724 



Sold 


Returned 


Balanc 


26 


4 


34 


24 




34 


12 




36 


4 




60 


48 


2 


4 


38 






40 




12 


24 


10 


52 


12 




22 


10 




44 


28 




42 


46 




44 
44 


312 


16 


428 

: — . ,:,.„■,» 



Prepare a statement of income and profit and loss showing costs, 
item by item; and a general balance sheet. 



49 



PROBLEM No. 3 



The Bethlehem Foundry Company, incorporated under the laws of 
the State of Pennsylvania, with an authorized capital stock of $1,000,000 
divided into 10,000 shares of the par value of $100 each, is engaged ex- 
clusively in the manufacture and sale of soil pipe. The plant, which is 
not owned by the Company, is located at Bethlehem, Pa. The Sales 
Department and Administrative Offices are located in New York City. 
The output is sold on a tonnage basis. 

A trial balance of the general ledger, New York Office, June 30, 1920, 
before closing follows: 



Cash — New York 

Cash — Bethlehem 

Machinery and Tools 

Office Furniture — Plant 

Improvements 

Flashes 

Models 

Patterns 

Notes Payable 

Insurance 

Salaries of Officers and Clerks — New York 

Sales Returns — 652 tons 

Scrap Iron 

Rebates 

Freight Allowances (Outward Freight). . 

Coke 

Coal 

Wood and Limestone 

Office Furniture — New York 

Accounts Receivable 

Accounts Payable 

Pig Iron 

Interest on Accounts Payable 

Capital Stock 

Sales — 29,134 tons 

Reserve for Depreciation of Machinery 

and Tools 

Commissions of Salesmen 

Traveling Expenses of Salesmen 



Forward 



Debits 

$20,100.80 

9,75o-52 
148,720.00 
1,889.60 
5,802.80 
247,669.88 
136,624.40 
298,827.72 

3,649.20 

75,477.00 

32,613.04 

100,489.20 

54,588.54 
112,435.70 

33,892.98 

10,525.56 
5,777-72 

10,585.50 
169,606.40 

527,885.54 
in. 80 



7,464.40 
6,236.40 



Credits 



1100,000.00 



i27,957-46 



800,000.00 
1,457,282.68 

31,008.60 



'•2,020,724.70 $2,516,248.74 



50 



Forward $2,020,724.70 

Rent — New York Office 6,000.00 

Traveling Expenses — Officers 4,114.94 

Directors' Fees 1,680.00 

Legal Expenses 6,500.00 

Office Expenses — New York 11,250.64 

Cash in Transit 5,000.00 

Labor — Direct 181,682.40 

Breakage 71, 553.74 

Shortage 30,548.52 

Reserve for Depreciation of Models, 

Patterns and Flasks 

Depreciation of Machinery and Tools. . 2,835.40 
Depreciation of Models, Patterns and 

Flasks 20,994.80 

Foundry Supplies 10,565.68 

Power 10,547.80 

Labor — Indirect 66,454.80 

Salaries of Manager and Clerks — Bethle- 
hem 23,083.00 

Rent — Bethlehem 10,000.00 

Interest on Notes Payable 4,662.60 

General Expenses — Bethlehem . 4,565.92 

Finished Goods — Inventory Account. .. 331,786.58 

Office Expenses — Bethlehem 2,524.78 

Salaries of Salesmen 25,661.14 

Salaries of Sales Manager and Clerks. . . 14,077.50 

Advertising 9,562.46 

Interest on Notes Receivable 

Interest on Accounts Receivable 

Cash Discount in Purchases 

General Expenses — New York 10,550.32 

Uncollectible Accounts — Written off. . . . 54,705.50 

Profit and Loss — Surplus 

Total $2,941,633.22 



12,516,248.74 



276,331.20 



1,055-64 
652.98 

4,125.82 



143,218.84 
12,941,633.22 



The inventories June 30, 1920, were as follows: Pig Iron, $98,977.14; 
Scrap Iron, $24,838.20; Coke, $2,240.18; Coal, $4,480.36; Wood and 
Limestone, $3,140.52; Finished Goods, $345,455.00. The unexpired 
portion of insurance was $1,143.60. A reserve of $32,682 should be 
established for doubtful current accounts. 

Prepare a statement of income and profit and loss, showing cost 
statistics; and a general balance sheet. 



5i 



PROBLEM No. 4 

The operating division of a factory is comprised of three departments 
designated as A, B, and C. The overhead for the month is made up of 
the following items: heat, $40; light (gas), $35; power, $800; repairs 
and maintenance of machinery, $1,025; depreciation of machinery, 
$180; superintendence, $200; rent, $250; insurance, $10; interest on 
borrowed money, $100. The data concerning the various departments 
is as follows : 

ABC 

Dimensions 40x30x20 ft. 15x30x20 ft. 20x30x20 ft. 

Machines - 12 3 7 

Horse Power 4 6 3 

Operating Hours 200 160 192 

Value of Machines $9,600 $12,000 $3,600 

Estimated Life 10 yrs. 20 yrs. 6 yrs. 

Borrowed Money — 5%... $9,600 $12,000 $2,400 

Repairs and Maintenance. $325 $200 $500 

Labor Hours 10,000 4,000 6,000 

From the above prepare a distribution sheet showing, with respect to 
each item of overhead, the amount applicable to each department. 



52 



PROBLEM No. 5 

The number of units in each of three different jobs is as follows: 

Job No. i Job No. 2 Job No. 3 

10,000 8,000 6,000 

The absorption of material and labor is as follows: 

Dept. A Dept. B Dept. C 



Material Labor Material Labor Material Labor 

Job No. 1 $4,320 $525 $450 $220 $300 $180 

Job No. 2.... 3,275 460 325 160 225 160 

Job No. 3.... 2,790 390 275 75 165 120 

Of the work turned out by department "A," 10% is defective and is 
worth 25% of the material and labor cost as scrap. The departmental 
machine rate in "A" is $5.93625. The allocated machine rates in "B" 
are, machine "X," $3.5998; machine "Y," $3,227; machine "Z," 
$3,198. The departmental machine rate in "C" is $4.7054. 

The machine hours and idle hours are as follows: 

ABC 





115 hrs. 
50 hrs. 
25 hrs. 
10 hrs. 


X 


Y 


Z 




Job No. 1 . . 
Job No. 2 . . 
Job No. 3 . . 
Idle time. . . 


10 hrs. 
8 hrs. 
5 hrs. 


57 hrs. 
22 hrs. 
12 hrs. 


23 hrs. 

20 hrs. 

3 hrs. 


90 hrs. 
60 hrs. 
42 hrs. 



200 hrs. 23 hrs. 91 hrs. 46 hrs. 192 hrs. 

From the foregoing data compile a cost sheet which will show with 
regard to Job No. 1 the unit costs (carried to six decimal places), sum- 
marized by departments and machines, and classified according to the 
elements of cost. 



S3 



PROBLEM No. 6 

(From New York State, C. P. A. Examination — Practical Accounting — 

October 2, 1907) 

A manufacturing company after erecting and equipping its factory, 
placing orders for materials and hiring a working force of skilled mechanics, 
commences operations. In addition to the financial accounts, arrange- 
ments have been made to conduct cost accounts from the outset, and the 
current details thereof grouped under account titles and collated upon 
"forms" show the following activities: 

Form 1 Receiving Sheet : 

Raw materials received into storeroom $ 7,701.37 

" 2 Consumption Sheet — Materials: 

Raw materials consumed 6,651.69 

" 3 Consumption Sheet — Manufacturing: 

Partly made goods consumed, combining values 

of materials 3,225.82 

and of labor . . . . . 3,106.26 

Previously expended, and to which further mate- 
rial and labor value were added. 

" 4 Production Sheet : 

Manufactured product, combining values of ma- 
terial 9,877.51 

and of labor 13,127.13 

As per manufacturing reports, discharging requisi- 
tions, collated on forms 2 and 3. 



5 Cost Sheet : 

Finished wares transferred from factory to ware- 
rooms, carrying prime cost of materials 

and of labor 

Adding further to the material cost $353.44 and 
$828.69, and to the labor cost $1,331.26 and 
$1,775 for factory expenses and management 
expenses respectively in each instance. 



5,890.69 
8,875.04 



Disposition Sheet: 

Total cost of finished wares sold 14,827.84 

Proceeds of sales 17,145.40 

54 



The register of manufacturing reports shows total application of direct 
labor to cost in the amount of $10,020.87 an d the pay-rolls show expendi- 
ture for labor in the amount of $10,466.16. 

Only requisitions discharged by manufacturing reports are collated on 
the Consumption Sheets for credit to accounts in the Materials and 
Manufacturing Ledgers. 

The medium for posting the charges and offsetting credits to manu- 
facturing accounts and for posting the credits to materials accounts is 
the Consumption Journal. 

The medium for posting the charges to finished wares accounts and 
the offsetting credits to manufacturing accounts is the Cost Journal. 

All materials, manufacturing and finished wares accounts carry units 
and price in each specific account, but only aggregates or controlling 
accounts are here dealt with. 

Frame Consumption Journal and Cost Journal entries. Show the 
subjects and amounts of charges and credits to the several ledgers in the 
cost system, also the charges and credits to general ledger accounts 
from data developed by the cost records. 



55 



PROBLEM No. 7 

(From New York State, C. P. A. Examination — Practical Accounting — 

June 25, 1907) 

The books of a manufacturing concern, operating under a system of 
cost accounts, show the following conditions at the opening of the fiscal 
year: raw materials in storeroom, $15,621.42; factory pay-roll, applied 
and distributed but not paid, 2 days, $831.78 ; partly manufactured goods, 
at prime cost, $63,888.44, and the further value of $8,037.17 to cover 
factory burden, also $12,074.92 to cover management charges; finished 
wares in stock at total cost of $21,656.01. 

The financial operations during the ensuing year include : purchases 
of raw materials, $80,416.45; factory pay-rolls, $125,793.90; factory ex- 
pense, including wages not applied to cost accounts, $24,846; manage- 
ment expenses, $38,100; interest paid on -loans, $1,200; income from 
investments, $5,004. 

The manufacturing operations during the same year comprehend: 
raw materials issued on requisition for consumption, $79,820.34; wages, 
applied and distributed to manufacturing cost, $120,250.40, and to 
factory expense, $5,959.39, included in the sum stated in preceding para- 
graph. 

Finished goods transferred from factory to warerooms, at prime cost, 
covering materials, $78,542.58, and labor, $118,333.75. 

The trading operations during the same year comprehend: cost of 
goods sold, $251,949.90; proceeds from goods sold, $302,339.88. 

At the close of the year the partly completed goods included, in addi- 
tion to prime cost, the further elements of value to cover factory and 
management expenses in the amounts respectively of $8,439.02' and $12,- 
678.66, and the factory pay-roll for three days, amounting to $1,247.67, 
which has been applied and distributed though not due till the close of the 
current work. 

The basis of the apportionment of On Cost or Overhead Charges was 
as follows: factory expense, 20% to materials and 80% to labor; manage- 
ment expenses, 30% to materials and 70% to labor. 

The transactions of the previous year in round amounts were used in 
calculating the current year's apportionments, viz.: materials, $75,000; 
labor, $115,000; factory expense, $24,000; management expense, $36,000. 

Open the general ledger accounts that control the cost accounts ; show 
the operation of each and the net profits resulting, also calculate the per- 
centage to be added to each $1 of material and of labor to give the total 
cost. 

56 



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